BoJ fixed Rate Ops Eyed after Long Weekend

JGBs return from the elongated Tokyo weekend and participants will have to react to the ratcheting up of geopolitical risk premium surrounding Russia & Ukraine.

• A quick reminder that the final overnight session of last week saw JGB futures rally on news that the BoJ will conduct an unlimited round of 10-Year JGB purchases today, via a fixed-rate purchase operation (covering JB#363-365, with the fixed rate on JB#365 coming in at 0.25%, the upper limit of the BoJ’s permitted trading band). The Bank is looking to reaffirm its commitment to its current YCC policy (as several senior board members, including Governor Kuroda, had alluded to in recent weeks) after 10-Year JGB yields closed just above 0.230%. on Thursday. Futures then faded the BoJ-inspired gains as we moved through Thursday’s overnight session, driven by the well-documented firmer than expected U.S. CPI data and hawkish communique from St. Louis Fed President Bullard.
• The aforementioned BoJ fixed rate purchases covering 10-Year JGBs will headline the docket today, although the broader risk aversion in play since the announcement may mean that the BoJ receives 0 offers.